Investing in an Impact Tech Venture from 3 different angles. And more than a hope.

When it is up to investments in Startups and new Ventures, most people are inclined to think that all investors are only looking to maximize their return and profit, aiming at pushing teams to grow and grow revenue and margins, forgetting about employees morale or impact on environment and civil society.

If this was true, and maybe still is true, for Wall Street investors and Startup raiders looking like the characters depicted in “the social network” movie, there are other and different categories of investors who have always worked below the radar, and they did take care of more socially responsible opportunities they could fund.

We are not talking here about philanthropist or individual donors, even if it is true that even such individuals are looking more and more for “investments”, meaning that they expect their contribution will have a return: we are indeed talking about Impact Investors and traditional investors, who are feeling now the need for allocating their assets to initiatives which could bring some value not to them only, but even to society and environment. 

So the Impact Investment trend is becoming more and more popular: many studies and research are now unveiling its potential, many investors and funds have starting to look at it, and many organisations are also looking forward to see if and how it can actually become mainstream.

The convergence on the importance of the SDGs from many actors and stakeholders of the civil society and political scene was part of the cause, recognising SDGs as the most complete and detailed set of goals we all, as human beings on Earth, should take care of. 

Notwithstanding this, still when you meet an entrepreneur who is pitching about what he and his Venture is doing to tackle one of the SDGs, solving one or more of the Humanity's Grand Challenges (as we call them in Hatch CoLab), you can see some skepticism in the people listening, as they were thinking: “Yes, but will this be sustainable from a profit standpoint?”, “where these guys want to make money from?”, and, the most dangerous criticism….. “They are talking about Impact, but how can they actually create an Impact and measure it??”.

Well, I have to say that many times such skepticism is deserved...and Impact Tech Ventures face the same challenges as traditional startups, like vagueness of Business Models, hard times to get customers, and other, so part of the criticism is actually hitting the point, and as many other startups they have to go through Business Model Canvas Iterations, testing, coaching, and many other steps.

But then you have the additional part, about Impact, and this is THE point we at Hatch focus on, on top of the amazing acceleration program we provide to Impact Tech ventures (disclosure: yes, I am part of it!).

Getting the ventures to better understand how to transform their desire for change into a sustainable business model, producing measurable and repeatable impact, is more a kind of art-not-science thing, making them investment ready and deeply conscious about the impact they can have in the world.

How do we do this at Hatch CoLab? We all come from direct, on field, entrepreneur expertise, and rely on a selected network of Top Notch Mentors from many of the most impactful organizations here in the Impact Valley in Geneva. 

That’s why we brought on stage last Thursday three brilliant minds which gave us, and our Hatchers, their view on how the investment industry is dealing with Impact Tech Ventures, and what to expect from investors. 

Which tools and instruments you should use to raise capital? How is a Venture Capital looking at your Company and which is the right phase to enter in contact with it? How should you choose the investor which is perfect for you and how will you communicate with him?

These and other questions were answered by Luca Merolla, Managing Partner of Guru Capital.

Actually he went much further, explaining some of the more technical reasons of big successes and epic failures of investments in the market, which kept the attention from the fellows alive and raised many questions. 

Then we finally came to the elephant in the room: how are VC’s dealing with Impact Investment and Impact Tech Venture? 

This question has become more and more mainstream after the famous letter from the President of Black Rock to the CEOs of their invested companies addressing the need for them to merge Purpose and Profit.

If for people like us, the merge of Purpose and Profit is not a new concept, and actually it is what Impact Investment is all about, that letter for the traditional investment industry was a kind of a New Deal and opened the eyes of many operators in the market.

Glad to see that the world is moving into the right direction! 

Perfect time then, for Enrique Hablutzel from Bamboo Capital to come onto the stage and tell us exactly how Impact Investing works in reality.

We shared how Financial giants as JP Morgan are also analysing and focusing on the growth of Impact Investment, and more and more investors did consider in the last years to start looking at Impact Investments as a proper and credible asset class.

So, where’s the deal with Impact Investments? Why aren’t we just saying that it is a new asset class, and that’s it?

Well, the new thing about this, is that investors are now realising that they can actually make money, AND doing good to the world. What is becoming no more a proper statement, is that Impact Ventures and Purpose driven startups are wasting money as they will never make profit. Indeed, they might be non profit entity, from a legal standpoint, but we are getting to a stage where great teams of entrepreneurs are able to build a Venture which is both doing profit AND solve some of the Humanity's Grand Challenges. 

Exciting, huh?

VC firms and Private Equity companies are starting to feel the same excitment, and again this is a good news for us, who are boosting purpose driven entrepreneurs and Impact Tech Ventures to scale.

Even better than this...we are not alone. 

Many small and big NGOs are now creating their own funds, or supporting accelerators and incubators to scout, select and boost purpose driven entrepreneurs, either through funds or different kinds of partnerships. Pratik Bhatnagar, well known social impact advisor who has worked with GAVI, WWF & WEF among the others, guided our Hatchers through this. 

We are used to think at NGOs like big and complex organisations, maybe inefficient, where startups are looking to fund from, but actually most of them are relying on donors and look for investments as well, so why should Impact Venture care about NGOS and try to talk with them?

Well, the fact is that many of such NGOs are actually tackling the same problems that Purpose driven entrepreneurs want to solve, and entrepreneurs can benefit from so many years of experiences and study and research, as well as NGOs can benefit of testing their projects with Impact Tech Ventures, more flexible and focused with dedicated teams. 

More innovative NGOs have started since years to work in this direction, having internal innovation offices working with startups, or launching calls for startups and prizes or awards, or partnering with stakeholders of the Innovation ecosystem, where the venture can be a kind of service provider for them and grow while testing their solution and products.

Looks like a form of Open (Social) Innovation, right? 

So whether from a Venture Capital, a Private Equity firm and Impact Investor or a NGO, the good news is that this is time for Impact Tech Ventures to really think about their strategy to scale, because there are plenty of opportunities out there, and definitely we as human beings cannot wait any more to make this world better soon.

More than a hope then, we are on the right track to enable entrepreneurs to change the world, and we are not alone. Let’s do it quickly and with the right ethics.